Brooks Brothers Bankruptcy Thread

[Leander walker]

Rookery store has lost money since 2008. They once had a free shoe shining service there,which was eliminated after 2008 recession. A friend of mine in corporate told me the store was marginal before 2008 and just kept getting worse. Would have closed anyway. As far as Madison Ave store s,that will not be closino DelVecchio owns and very valuable. The store is also iconic and a symbol of what the company once stood for. Brooks Brothers is going to continue as a trimmed down but going concern. The question is whether the new owners will choose mass or class.

 

[Phileas Fogg]

Oh, well, at least they had taste to loot Brooks Brothers. lol.

That's a pity. I never got to go to the one in Chicago.

Neiman Marcus is also closing its Hudson Yards store in NYC. Hoping for a big sale.

the whole Hudson Yards thing made no sense at all. Went there the last time we were in the city to climb up the structure. It was cool. The mall thing made no sense. Lots of high end stores sitting empty. As though there’s a shortage of high end retail in NYC.

Paul Stuart is right across the Brooks in the Rookery and it was untouched.

 

[Phileas Fogg]

Another take on the future of BB

Brooks Brothers could be saved but it will never be the same

When Brooks Brothers emerges from Chapter 11 bankruptcy and reorganizes under new ownership many of its 250 retail stores will almost certainly vanish in an attempt to cut costs.

www.foxbusiness.com

 

[Big A]

I had a client who wanted to buy the Garland factory, but BB wouldn't deal with it pre-bankruptcy (understandability)

 

[Big A]

Rookery store has lost money since 2008. They once had a free shoe shining service there,which was eliminated after 2008 recession. A friend of mine in corporate told me the store was marginal before 2008 and just kept getting worse. Would have closed anyway. As far as Madison Ave store s,that will not be closino DelVecchio owns and very valuable. The store is also iconic and a symbol of what the company once stood for. Brooks Brothers is going to continue as a trimmed down but going concern. The question is whether the new owners will choose mass or class.

P.E. ain't known for "class"

 

[EdwardWilson]

Sorry....sacked as in broken into, looted and trashed. It’s been closed since and doubtful it will re open.

Really too bad because ironically the customer service was great and they had a very skilled alterations tailor in house.

The Rookery was my favourite store when I lived in Chicago. Had no idea the looters were on La Salle and Adams.

But sadly that store was also on the decline. The great customer service was getting few and further between. My salesguy said they cut commission and that was the beginning of the end.

 

[dieworkwear]

Recently, I interviewed the owner of one of the small boutique brands for Ivy styled clothing. He used a Brooks Brothers factory for about ten years for his production. We talked about a lot of things -- his target customer, the changing market, and American manufacturing. Oddly, many of the people who care about this stuff the most are the least likely to pay for it. At Garland, you could see Thom Browne shirts going down the production line. At Southwick, there was R13 tailoring. Does the R13 customer care about American manufacturing? (For those unfamiliar, just look up the brand). Probably not.

Yet, it's easier for those companies to manufacture in America because they have such high price points. Meanwhile, these very small, boutique labels that sell themselves on classic American clothing and American manufacturing are getting squeezed in every direction -- more online competition, demanding customers, and sales. Many people who say they like these things shop on sale, shop second-hand, or don't shop at all.

In these market conditions, it's no wonder why small brands are moving their production to Asia. When I asked him if there were any trade-offs to moving things to Asia, the guy I interviewed said not at all (he's using American and Asian factories now). In fact, Asian factories are not only just as good in terms of production (at least for some things); they have faster turnaround schedules and better quality control. They also have digital technologies that allow for better and more seamless integration. It's easier to work with them, which allows a small brand to focus their efforts in areas where it counts (e.g., marketing).

In such a situation, I can see small brands doing a better job selling the idea of classic men's style if they moved their production abroad. They may have more competitive price points. They can do things like lookbooks to draw in new customers (the 2010 heritage customer has slowed down his purchasing). They can improve their margins. And so forth. People may lament this kind of offshoring, but again -- people who care about this sort of stuff often just don't buy at full price.

On the factory side, many of these American factories mainly work for brands that aren't strictly classic. About 70 to 80% of the production at Brooks-owned factories went to Brooks. But then the remaining share went to third party brands. At Southwick, there was R13 and Todd Snyder. At Garland, it was brands such as Thom Browne and (if you can believe) Untuckit. Those factories also have to find ways to survive, and it's not just about making classic American clothing (I believe Hickey at the moment is making military uniforms).

These seem like two separate concerns: wanting classic men's style, specifically whatever can be called trad or Ivy, to survive. Then wishing the best for American manufacturing.

I imagine the production volumes at these enthusiast driven brand are too small for them to make a difference at a large American manufacturer. I remember hearing the production percentages at Cone and was impressed by how much they were really making for big fashion names. But to the degree that enthusiasts make a difference, there are still a ton of classic brands that produce in America, as mentioned earlier. That said, I can see a future where classic men's style lives on overseas like David Marx' Ametora story.

Interestingly, TAL -- the Malaysian shirt manufacturer -- was brought into Garland at one point to help make the factory more competitive.

 

[Steve Smith]

I had a client who wanted to buy the Garland factory, but BB wouldn't deal with it pre-bankruptcy (understandability)

There were at least two parties trying to buy that factory. I assume that the bankruptcy filing threw a monkey wrench into that possibility because everything now will have to go through the court for approval. No point in buying and then facing the uncertainty of having the transaction rescinded. So I would think that a buyer would balk at the situation. There is also another complication.

Anyway, the plant is shut down now and for most buyers that would decrease its value. Labor will probably still be available to rehire. That is local and will probably not be leaving the area. Management? I'm not sure. That factory had a talented management team which could find good jobs elsewhere. And a new buyer will find it difficult to find talented people who want to relocate to podunk Eastern North Carolina.

 

[Steve Smith]

On the factory side, many of these American factories mainly work for brands that aren't strictly classic. About 70 to 80% of the production at Brooks-owned factories went to Brooks. But then the remaining share went to third party brands. At Southwick, there was R13 and Todd Snyder. At Garland, it was brands such as Thom Browne and (if you can believe) Untuckit. Those factories also have to find ways to survive, and it's not just about making classic American clothing (I believe Hickey at the moment is making military uniforms).

Thanks for that post, a lot of interesting info there. UnTuckit and a few other labels seemed to me to be outliers as far as branding is concerned, but after all it is a sewing factory. I think that many people would be surprised to find out that their favorite brand owns no manufacturing capacity and is manufactured as third party work by someone else.

 

[clee1982]

Isn’t most brand outsource manufacturing being the norm these days?

 

[letsgofire]

My take on Brooks Brothers is that they were, to some extent, resting on past glory and that their attempts at revitalization came too infrequently. Their Great Gatsby collection was, for me, a great example of how they have the ability to package their history and brand into a “right now” offering for the consumer. Not everyone was a fan of that collection of course, but it certainly was something that grabbed attention.

In recent years I didn’t see much of that magic. I can’t remember the last new offering I got very excited about. Perhaps their Own Make line.

They also haven’t moved as fast as the market in some important trends. In particular they were slow to the slim-ification of business apparel. I think if we consider the groups of young men who men who entered the workforce over the past 15 years, many of them would view Brooks Brothers as a baggy fit, something that this cohort doesn’t get too excited about.

The bankruptcy filing is mostly about debt levels though. The retail ownership model of choice, especially for private equity, is to 1) ‘get the box if the store right’ 2) take on debt to add more ‘boxes‘ in more geographies and 3) sell to a new owner (thereby creating great return from that debt leverage). The past year has seen this model broadly fail, with many familiar names experiencing bankruptcy.

I think the go-forward business learning will be that profit margins enjoyed by retailers will remain thin and that owners will need to operate with structurally lower debt levels.

 

[clee1982]

they try to cater both ways probably.

I was excited about own make, though they basically introduced it at the height of menswear, I mean even if BB was successful through out the whole menswear era and maintain the quality, given their size I can't see they survive. They didn't really sell their EG until sales, Alden/CJ definitely to a lessor extent, but things just not moving at retail. Even if they can hold the line at no discount, they're still competing with specialty store.

For reason unknown to me, people who buy EG/GG rather go to shoe store instead of BB/Paul Stuart even when carry same thing and at the same price. I guess people are banking on BB/Paul Stuart to discount EG/GG (which they eventually did when they stop carry them)

 

[JJ Katz]

great bit! They probably all read Proust too.

Could you SUMMARISE that for me?

 

[Steve Smith]

The Brooks Brothers Garland Shirt Company is being bought by Laws of Motion, a New York City women's clothing brand which sells dresses in up to 99 'microsizes' so a woman can get a more correct off the rack fit. Interesting concept.

So the factory will reopen. We'll see if they continue to manufacture men's shirts. They have the people and the equipment. It could be a fairly quick process to rebuild that revenue stream.

 

[clee1982]

are they MTO? Off rack carrying up to 99 sizes would be kind hard